The Risk and Insurance Management Society Inc. (RIMS) will be descending on Capitol Hill on June 12 and 13 to push for an extension of the Terrorist Risk Insurance Act (TRIA). Passed originally in 2002 in the wake of the 9/11 attacks on the World Trade Center and Pentagon, the TRIA legislation was designed to provide a federal government backstop to the insurance industry to cover catastrophic losses from terrorist attacks. Essentially, the backstop guarantee has allowed the industry to offer affordable terrorism coverage to U.S. companies. Initially conceived as a three-year program with the idea that private industry would eventually shoulder the burden, TRIA was extended for another two years at the end of 2005, although the government raised the trigger, to $50 million in losses in 2006 and $100 million in 2007, from $5 million, at which point it would begin to share in the cost. Now, RIMS will be pushing for at least a 10-year extension of the program, scheduled to sunset Dec. 31, 2007, and the inclusion of nuclear, biological, chemical and radiological (NBCR) exposures. "We think TRIA is a matter that is essential to the national economy, not a bailout for the insurance companies," says Terry Fleming, a RIMS board member and its director of external affairs.

The group is likely to receive a warm welcome from Congress. While it is unclear where the Bush Administration stands on the issue, Fleming acknowledges that there is broad support on both sides of the aisle for extending TRIA. While no legislation has been introduced yet, both Sen. Christopher Dodd (D-Conn.), who chairs the Senate Banking Committee and Rep. Barney Frank (D-Mass.), chair of the House Financial Service Committee, have indicated they will fast-track a long-term extension in Congress. "Indications are that they're looking at [an extension of] between six and 15 years. We're hoping for something in the area of 10 years," says Fleming. "We hope that will encourage investment by the capital markets to help establish some capacity for the NBCR exposure."

While in D.C., RIMS will also be lobbying for changes in the law that would make it easier and less costly for insurers and their corporate clients to buy and sell coverage across state borders by establishing a federal authority. The two pieces of legislation being considered by the Congress are known as the optional federal charter initiative, which would offer companies operating across state borders the option to operate under a single set of federal insurance rules, rather than individual state regulations, and the surplus lines bill. This legislation would allow companies operating in many states across the country to buy auto insurance for all company vehicles from a single insurer in their home state, rather than seek coverage through a licensed insurer in each state, as one example of its impact. "What the surplus line and optional federal charter will do is establish a federal authority so that you only have to file the rate and form information in the home state of the insured," says Fleming, adding that it will eliminate an administrative nightmare for companies. Fleming is optimistic that the surplus lines overhaul, which was passed by a wide margin in the House during the last session, will pass this year, but adds that the outlook for passage of the optional federal charter legislation is much less bright.

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